District heating/heat networks have emerged as a key pillar in the government's plan to deliver efficient, low-carbon heat to homes, businesses, and public buildings across the UK. As such, legislation was laid in the Energy Act 2023 to appoint Ofgem as the industry regulator, meaning that heat network customers will have similar statutory protections to other utility customers.
We’ve been engaging with Ofgem, DESNZ and the Energy Ombudsman throughout the development process to build a regulatory regime. Recently, two key industry consultations were issued to define the requirements networks must meet when most authorisation conditions for networks become live in January 2026.
Even though all of our networks meet the voluntary Heat Trust standards for good practice, 2025 will still be a transformative year for all heat network operators and suppliers as we prepare for new regulatory requirements and consumer safeguards. Here, we highlight what you need to know.
Consultations broken down
Key proposals of the Consumer Protection Consultation & obligations for heat providers
- Supply contracts must outline terms, charges, termination conditions, and dispute resolution procedures.
- Standards of conduct are defined, that should address supplier behaviour, information provision, customer service, vulnerability approach, and consumer engagement.
- Pricing should be fair, reflective, cost-efficient, affordable, risk-balanced, growth-supporting, and transparent.
- Vulnerability measures should include a Priority Service Register, payment difficulty protections, and disconnection safeguards
- Complaints and Guaranteed Standards of Performance (GSOPs) apply requiring a clear process, record-keeping, and compensation for breaches.
- Billing and transparency practices should provide detailed information on charges, fuel sources, and environmental impacts.
- Step-in interventions in the case of network insolvency are defined to include financial management and continuity plans, last resort direction, and a Special Administration Regime.
- Market segmentation boundaries are defined for the three proposed segmentations: large networks, small networks, and not-for-profit networks.
Key proposals of the Authorisation and Regulatory Oversight Consultation
- Includes proposed definitions and obligations of the heat network Operator and Supplier, along with role definition and how to establish the ‘responsible’ party.
- Details of how and when regulation will be implemented (see the ‘what next?’ section below).
- Confirmation of what information will need to be submitted to become a Registered (for existing) or Authorised (for new) network.
- An outline of the auditing regime, which will be conducted at desk level for a whole entity, rather than for a specific network.
- The regular monitoring information to be submitted via a digital service, including financial data, heat source data and customer data.
Regulation is key to protecting consumers
Balancing regulation and market growth is absolutely essential to safeguarding heat network consumers, both domestic households and businesses. It will ensure fair pricing, offer enforceable protections for vulnerable customers (including priority services and safeguards against disconnection), require networks to maintain robust complaints processes, and hold networks accountable to certain Guaranteed Standards of Performance (GSOPs).
Industry competition can drive ambitious targets
In order to meet net zero targets, the UK government has forecast that low-carbon heat networks will need to provide 18% of the UK’s heat by 2050 (up from ~3% now). This ambitious target can only be achieved by fostering a competitive environment for network operators, with legislative parameters that don’t particularly favour the larger providers, or those who dominate the existing utility infrastructure. In short, monopolisation must be avoided to ensure continued innovation, efficiency, and value for customers.
Investment requires load commitment
Heat networks require substantial upfront capital, often reaching into tens of millions of pounds for infrastructure development and implementation. This financial commitment becomes more viable when underpinned by the assurance of sustained, long-term heat demand. Therefore, regulation should facilitate investment by mandating that some public sector or high heat demand buildings connect to heat networks where feasible, which would not only provide the necessary load commitment to attract investment but also signal strong government backing for the technology, and propel the public sector towards meeting their net zero goals.
Why they matter to us and why it matters for you:
What’s Next?
Veolia has responded directly to both consultations, and will continue to engage with Ofgem and DESNZ in this developing policy area. Further industry consultation around fair pricing is expected later in 2025, along with more specific guidance on network authorisation applications and data submission.
The rollout of regulation is expected to begin on 1 April 2025, when it will become a criminal offence to conduct the regulated activities of operation and supply on a relevant heat network without proper authorisation. The consumer protection framework will be implemented in stages, with full regulatory requirements expected to be in place by 26 January 2027.
April 2025:
Initial Regulation Period starts
Existing and new regulated activities deemed authorised
Consumer protections, advocacy, and redress services begin
Heat networks join consumer advocacy and redress schemes
Operators must begin registering for authorisation
January 2026:
Full regulatory regime and main authorisation conditions come into force
Ofgem gains enforcement powers for authorised persons
Digital service for regulation and interactions expected to go live
January 2027:
Deadline for deemed authorised entities to register with Ofgem
Implementation of more complex regulatory activities (pricing, performance standards, etc.)
January 2028:
End of the Initial Period of regulation
As the UK government introduces new regulations for heat networks, we're committed to staying at the forefront of these developments. In support of and in collaboration with customers, Veolia has built decades of experience in designing, building, owning, operating and maintaining district heating and cooling solutions. We manage over 600 heating schemes, and 7,000km of pipe networks globally!
Contact us directly here to learn more about our solutions.